If you are disappointed because you found out that someone else has already submitted an offer on your dream house and the seller has accepted it, you may want to consider making a backup offer. The housing market has been tight everywhere in recent months, things don’t always work out and if you really like the home, you might want to consider this possibility. We have written quite a number of backup offers on behalf of buying clients which resulted into getting them their dream home after all. No guarantees, but it may be worth a shot, however, don’t get hung up on just this one and only house. Continue with your home search and keep your mind open for other possibilities.
There are many reasons an original offer could fall apart, here are some examples:
- Lenders have much stricter loan requirements nowadays and if the buyers can’t get their final loan approval, a transaction can fall apart.
- Lenders require a value appraisal to verify the home’s worth. If the appraiser says the property is worth less than the price offered and the buyer and seller cannot come together on the price, the lender can deny the mortgage.
- The home inspection might reveal problems that the buyers don’t want to deal with, or a seller may not want to address, therefore the original offer can fall apart. Just know, if any problems were uncovered through the inspections conducted for the first buyer, the seller is required to disclose these, if he/she is aware of them. This will be helpful before you start spending time and money on inspections of your own. You may decide to accept the home in its present condition, you may wish to try to renegotiate your offered terms/price, or you may wish to pass on the purchase of the home based on such information. Understand that any change to your offer, requested by you in writing and submitted to the seller, opens up the contract and your offer could be off the table.
- The buyers may have built in a contingency in the original offer, making it subject to the sale of their current home. If that sale doesn’t materialize in time, the domino effect could make your dream home available again.
- There might be problems due to homeowner association (HOA) requirements. For example, the buyers might have three pets and back out of the contract when they discover the HOA only allows two.
Because a backup offer is a binding contract, you want to be sure that your financing is approved (if you are planning to obtain a mortgage) and that you’ve included all the contingencies that you would have in a first offer. If the original contract falls apart for any reason, you should be prepared to follow through with the purchase. Make sure your offer is a fully executed agreement signed by you and the sellers, outlining price and terms. This will ensure that the sellers will sell to you first within a specified time period if the house becomes available again, you will also want to make sure that you have the ability to withdraw your backup offer at any time prior to it becoming the primary offer, in case you find another house you like.
We help our clients through the home buying process and are there to guide them every step of the way. Contact us today at 517.962.8803!
Randy and Yvonne Hoyt
RE/MAX Mid-Michigan Real Estate
2300 W. Michigan Avenue
Jackson, MI 49202